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Essential Customer Experience Metrics & KPIs [2024]
According to a recent survey by GoodFirms, 53.2% of businesses currently have a dedicated Customer Experience Management team. This development isn’t surprising, given how customer expectations have increased in the past two decades.
According to a survey of 15000 consumers, 33% of customers will leave a brand after one bad customer experience, and 92% will leave after 2-3 bad experiences. These statistics underline the importance of good CX for a business.
But you can’t improve what you can’t measure and need customer service KPIs and metrics for future success. This article will focus on the key KPIs and metrics CX professionals should focus on in 2024. We’re covering:
3. Conclusion
7 Most Important Customer Experience Metrics and KPIs
Metrics measure the incremental everyday progress that you make toward your business goals. These are quantifiable measurements, which, when improved, will improve your KPIs overall.
KPIs are key performance indicators that are a part of your overall business goals. Both of these measurements are important to achieve your business goals.
Most CX leaders recommend that you measure the following metrics and KPIs:
1. First Response Time (FRT)
This measures the time a business takes to respond to a customer query. For only human-managed systems, this can range from a few hours to a couple of days, but for “human + AI” chatbot systems, this metric is reduced to become almost instantaneous.
This metric dictates the amount of time you take before providing the answer to a customer’s questions.
Since 60% of customers feel that a 1 minute hold time is too long, optimizing this metric improves overall customer satisfaction (CSAT) scores.
Formula to Calculate First Response Time
First Response Time is the average time a business takes to respond to a customer. So, the simple formula is:
FRT = (Sum of all first-response times) / No. of customer queries
2. Average Resolution Time (ART)
Resolution Times for queries vary wildly within a business. If the problem is complex and requires significant effort, the problem may only be resolved in weeks, or if the query just asks a simple question, the problem may be resolved in minutes.
This is why reducing the average resolution time (ART) is recommended. A reduction in this metric showcases that most problems are being addressed quickly.
A reduction in ART may directly influence:
Because of these changes, a reduction in ART increases your CSAT score and reduces your CES scores. Additionally, this increases the confidence level of customers and your NPS score.
Formula to Calculate Average Resolution Time
The First Response Time equals a business’s average time to resolve a query. So, the simple formula is:
ART = (Sum of all resolution times) / No. of customer queries
3. Customer Satisfaction Score (CSAT)
This is a quantified measure of how customers feel about your product or service. Usually, CSAT is a long-term KPI that a business focuses on.
This is because an increase of 1% in CSAT scores can lead to an increase of 4-5% in the company’s overall revenue.
CSAT scores are calculated through customer service surveys, where you ask customers about their satisfaction with a particular process.
You can use CSAT scores to measure:
CSAT is a fairly standard metric for CX leaders, calculated through two methods.
Formula to Calculate Customer Satisfaction Score
Composite CSAT Score
This calculates the average CSAT score across all your customers, so
CSAT = (Sum of all the Ratings you’ve received) / No. of customers who gave ratings
Top-Two Box
This measures the number of customers satisfied with your product or service. This considers the customers who rated your service in one of the top two ratings (people who rated you 4 or 5 on a 5-point scale or 9 or 10 on a 10-point scale).
So here:
CSAT = (No. of satisfied customers)/(No. Of customers who gave ratings) * 100%
4. Customer Effort Score (CES)
Customer Effort Score (CES) measures the effort a customer needs to put in for a process. This is also collected through surveys, and people rate the effort they put into a process.
This score is usually sufficient to indicate the following:
This measure is especially useful for product companies where customer workflows are very important. It also indicates the customer support style that is the most effective for your clients.
Formula to Calculate Customer Effort Score
You measure CES through surveys where your customers agree or disagree that your processes are easy. So, effectively, you want to understand the percentage of customers who gave a higher rating to estimate CES.
Your survey asks customers: “Do you feel this process was easy?” The customer can rate it from 1 to 5 as an answer. So, your customers who found it easy must have rated it 4 or 5.
So, the calculation becomes:
CES = (No. of customers who rated a process as Easy) / (Total no. of customers who responded) * 100
5. Net Promoter Score (NPS)
Net Promoter Score measures the number of customers recommending your product to their friends. This is measured by asking your customers if they will recommend your product to their friends on a scale of 1 to 10.
NPS ratings are a great indicator of how many evangelists you have on your customer list. It’s also an industry standard and easy to benchmark against any industry.
Formula to Calculate Net Promoter Score
When you survey your customers about their choice to recommend your products, there will be detractors (rating 1 to 3) and promoters (rating 8-10).
So, the calculation becomes:
NPS = (((No. of promoters) - (No. of detractors))/(No. of respondents))*100
6. Churn and Retention
Churn and retention measure how many customers continue using your product or service versus how many people have stopped using them.
This is a great indicator of revenue and overall growth for a company, but it can also be a good indicator of customer experience.
The assumption is that customer experience is directly tied to whether they will continue using a product.
For calculation, we will focus on the churn and retention rates.
Formula to Calculate Churn and Retention
For Subscription Businesses
Churn Rate = (No. of customers who canceled the subscription during the month) / (Total no. of customers at the beginning of the month)
For Non-Subscription Businesses
Retention Rate = (No. of customers who made a repeat purchase in a specific period) / (Total no. of customers at the beginning of made their a purchase in the previous period)
7. Customer Life Time Value (CLTV)
The end goal of any business is to increase its profitability and overall revenue. While multiple financial metrics track these achievements, there is also a specific metric for customer experience.
Customer lifetime value measures the revenue a customer provides you over the period they use your product. This helps you measure customer loyalty and their overall experience with your product.
Formula to Calculate Customer Life Time Value
For Subscription Businesses
CLTV = (Average revenue generated by a customer per year) * (Average no. of years a customer stays subscribed)
For Non-Subscription Businesses
CLTV = (Average purchase value) * (Average number of purchases made by a customer)
How to Measure Customer Experience Metrics and KPIs?
There are several standardized methodologies to measure the customer experience metrics that we’ve outlined above. The most popular choices that we’ve seen are:
1. Surveys – Surveys that pop up inside your product, on a chatbot, or are sent across Emails are effective ways to calculate CSAT, CES, and NPS.
2. Customer Service Platforms – A platform like Kommunicate, a no-code chatbot builder gives you access to centralized metrics around ART and FRT.
3. Revenue Software – You can use a platform like ChartMogul to measure your churn rate, retention, and CLTV.
4. Social Media – Platforms like Instagram and Facebook also double as social listening tools where you can check customer reviews for your products to measure CSAT.
5. Listing sites – Google My Business, G2, and Capterra are listing sites where you can access the latest customer reviews. These reviews can be a good way to understand your CSAT scores.
Final Thoughts
Peter Drucker once said: “You can’t improve what you can’t measure.”
Customer experience as a function has often been relegated to qualitative measures. However, more mature businesses need to calculate the statistics that can effectively reflect your customer experience operations.
CSAT, NPS, and CES, often considered the key performance indicators (KPIs) for customer service, are a great way to get started. And if you want short-term OKRs that will influence these metrics at a macro level, the ART and FRT metrics can give you information about what works for your customers.
Once you focus on these five metrics, you can increase retention and CLTV, increasing your bottom line. More businesses are adopting these metrics as the north star, and we predict that as technology expands, this will become common practice for everyone.
Meanwhile, if you need a live chat platform that calculates your FRT, ART, and CSAT you can try out Kommunicate.